The duties, rights and liabilities of partners in the conduct and management of the affairs of the partnership are contained in its partnership deed. However, if on any point, the deed is silent, then the relevant rule of the Partnership Act, 1932, will apply.
In the absence of a written partnership agreement, the mutual rights and duties of partners shall be governed by the Partnership Act which isas follows.
General Duties of Partners
Partnership Act describes the general duties of partners as under:
“Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful’ to each other and to render the true accounts and full information of alt things affecting the firm to any partner or his legal representative”.
All the duties of partners arise from the principle of goods faith which is to be all and end all of a partnership. These duties as described n Section 9, 10, 12 and 13 of Partnership Act are described as follows:
(a) Duties of a Partner
I. Co Advantage
Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other and to render the true accounts and full information of all the things affecting in the firm any partner or his legal representative.
partner shall compensate the firm for any loss caused to it by his fraud in the conduct of the business of the firm.
3. Loss Caused by Willful Neglect
The Act provides that a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm.
4. Due Diligence
Every partner shall attend honestly and carefully to his duties in the conduct of business.
5. Provision of Information
is the duty of the partners to give full information about the affairs of the firm to one another.
(b) Rights of a Partner
According to Section 12 and 13 of the Partnership Act, the rights of a partner are as follows:-
1. Right to Take Part in The Management
A partner has a right to take part in the management of a business subject to the agreement.
2. Expression of Opinion
A partner has a right to express his opinion before the matter is decided, but no. change may be made in the nature of a business without the consent of all the partners.
3. Inspection of Books
A partner has a right to inspect and copy any of the books of the firm.
4. Right to Be Indemnified
A partner has the right to be compensated by the firm in respect of expenses incurred by him or any losses suffered by h in the conduct of his business.
5. Right to Continue
partner has the right to continue in the business unless he is expelled according to the provisions of Deed and in good faith.
6. Use of Property
The partner has the right to see and ensure that the property of the firm is held and used exclusively for the purpose of the business.
7. Sharing of Profit/Loss
Every partner shall have an equal share in profits/loss in a business, unless otherwise mentioned in partnership deed.
8. Interest on Capital
A partner is entitled to receive interest at the rate of 6% per annum on the excess money supplied over his capital.
9. Right to Retire
A partner has the right to retire according to the provisions of agreement or with the consent of the other partners.
(c) Liabilities of a Partner
According to Section 13(c) of the Partnership Mt subject to contract between the partners, the obligations of a partner are as follows.
1. Joint Liability
Since every partner is the agent of the firm for the purpose of carrying on the business, he is, therefore, jointly and separately liable for all business debts of the firm.
2. Liability of a New Partner
A new partner cannot be held responsible for the loss or claim the share of profit before his date of admission.
3. Property of The Deceased
The property of the deceased cannot be held liable for any obligation incurred by the firm after his death.
4. Liability of Retiring Partner
retiring partner is liable for the debts of the firm incurred before the date of his retirement.
5. Competitive Business
A partner cannot engage h in any business in competition with the business of the firm. If he does so, he is liable to surrender the profits to the firm of which he is a partner.
6. No Private Use of Property
A partner cannot use the property of the firm or its goodwill for his private gains, if he does so he is liable to surrender the profits so earned to the firm.
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